An overnight stay funded by the boss does not generate income for the employee

The NSA held that the provision of overnight accommodation to an employee at the place of secondment is made solely in the interest of the employer and not in the interest of the employee and serves to fulfil an employee’s duty. The key argument is that, in the case under review, the employee was not free to manage the benefits provided by the employer and used them only for the purpose of fulfilling the employee’s duties.

Interesting conclusions

The judgment under review is very interesting because of several other issues raised in it. First of all, the court departs from the already established line of case law based on the provisions of the PIT Act that the employer’s provision of overnight accommodation for posted employees constitutes income from the employment relationship for them for obtaining a gratuitous benefit.

NSA does not deny the correctness of the interpretation of the provisions of national law. However, the court draws attention to the provisions of EU law, which have not been analysed so far. NSA points out that on the basis of the provisions of Directive 96/71/EC on the posting of workers in the framework of the provision of services, the value of employers’ benefits in kind or reimbursement of expenses incurred by employees posted to perform work in another EU state in respect of travel, board and lodging costs cannot be considered part of the employee’s remuneration.

According to the SAC, the conclusion that there is no income cannot be made dependent on where the work is performed. Also in the case of the provision of overnight accommodation to employees posted to perform work in a country other than an EU member state, there will be no grounds for assuming that the employees receive income from gratuitous benefits. In the court’s view, it is difficult to find rational reasons why the same employee should receive gratuitous benefits from employer-provided accommodation for part of the month or year and not for part. The only differentiating criterion in such a case would be the place of posting.

Application of the directive

The NSA judgment also indicates the possibility of applying the direct effect of the provisions of Directive 96/71/EC in practice. Invoking the direct effect of a provision of the Directive is the right of the entity to which the Directive directly confers an entitlement, which is impossible to exercise through the fault of the EU Member State. In turn, a Member State cannot invoke the provisions of a non-implemented or incorrectly implemented Directive against individuals. The case under analysis concerns both the entitlements of posted workers and their employer as a potential PIT payer. Thus, in the NSA’s view, the employer is entitled to invoke the provisions of the EU directives and the tax consequences arising therefrom with respect to benefits incurred by the employer for the benefit of employees.

Similar theses were presented by the NSA, inter alia, in its judgment of 6 February 2024 (case ref. II FSK 609/21).